Fitch Expects to Rate State Board of Regents of the State of Utah,
Series 2016-1; Presale Issued

October 14, 2016 05:27 PM Eastern Daylight Time

NEW YORK--(BUSINESS WIRE)--Fitch Ratings expects to assign the following ratings to the State Board
of Regents of the State of Utah Series 2016-1 (Utah 2016-1) student
loan-backed notes:

-- $441,800,000 series A notes 'AAAsf(EXP)'; Outlook Stable;

-- $10,450,000 series B notes 'AAsf(EXP)'; Outlook Stable.

KEY RATING DRIVERS

U.S. Sovereign Risk: The trust collateral comprises Federal Family
Education Loan Program (FFELP) loans with guaranties provided by
eligible guarantors and reinsurance provided by the U.S. Department of
Education (ED) for at least 97% of principal and accrued interest.
Fitch's U.S. sovereign rating is currently 'AAA'/Outlook Stable.

Collateral Performance: Fitch assumes 14.25% base case default rate and
42.5% under the 'AAAsf' credit scenario. The claim reject rate is
assumed to be 0.25% for the base case and 2% for the 'AAAsf' case. Fitch
applies the standard default timing curve, constant default rate (CDR)
and prepayment assumptions for FFELP loans in its cash flow analysis.
Current level of deferment, forbearance and income-based repayment (IBR)
are 10.3%, 9.2% and 9.5%, respectively, which are used as the starting
point in cash flow modeling. Subsequent declines or increases are
modeled as per criteria. Fitch assumes 0.47% borrower benefits in the
cash flows analysis based on information provided by the Board.

Basis and Interest Rate Risk: Fitch applies its standard basis and
interest rate stresses to this transaction as per criteria.

Payment Structure: Cash flow scenarios for the 2016-1 notes were
satisfactory under 'AAAsf' stress case for series A notes and 'AAsf'
stress case for series B notes, using Fitch's Student Loans ABS cash
flow model (SLABS). Total credit enhancement (CE) is provided by
overcollateralization and excess spread and, at closing, total parity is
expected to be 102.09%. Additionally, the senior notes benefit from
subordination provided by the series B notes with a starting senior
parity of 104.5%. Liquidity support for the Utah 2016-1 notes is
provided by a $500,000 capitalized interest account and a $1.13 million
reserve account funded at closing with note proceeds. The specified
reserve fund balance is equal to the greater of 0.25% of the outstanding
balance of the notes and $678,375.

Maturity Risk: Fitch's SLABS cash flow model indicates that the notes
are paid in full on or prior to the legal final maturity dates under the
commensurate rating scenario.

Operational Capabilities: Day-to-day servicing is provided by The State
Board of Regents of the State of Utah. Pennsylvania Higher Education
Assistance Agency will act as backup servicer. Fitch believes both
entities to be acceptable servicers of FFELP student loans.

Fitch will treat certain assets such as claims filed as short-term
assets in its cash flow analysis. Given that Fitch's current criteria is
silent on the treatment of such assets, this treatment is considered a
criteria variation. Fitch does not believe such variation has a
measurable impact upon the ratings assigned.

RATING SENSITIVITIES

Since the FFELP student loan ABS relies on the U.S. government to
reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem
with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign
rating, defaults, basis risk, and loan extension risk account for the
majority of the risk embedded in FFELP student loan transactions.
Additional defaults, basis shock beyond Fitch's published stresses,
lower than expected payment speed, and other factors could result in
future downgrades. Likewise, a build-up of CE driven by positive excess
spread given favorable basis factor conditions could lead to future
upgrades.

Key Rating Drivers and Rating Sensitivities are further described in the
updated presale report titled 'State Board of Regents of the State of
Utah, Series 2016-1', dated Oct. 14, 2016 available on www.fitchratings.com,
or by clicking on the link.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

No third-party due diligence was provided or reviewed in relation to
this rating action.

REPRESENTATIONS, WARRANTIES AND ENFORCEMENT MECHANISMS

A description of the transaction's representations, warranties and
enforcement mechanisms (RW&Es) that are disclosed in the offering
document and which relate to the underlying asset pool is available by
accessing the appendix referenced under 'Related Research' below. The
appendix also contains a comparison of these RW&Es to those Fitch
considers typical for the asset class as detailed in the Special Report
titled 'Representations, Warranties and Enforcement Mechanisms in Global
Structured Finance Transactions,' dated May 31, 2016.

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